Unlocking Energy Efficiency in China: A Guide to Partnering with Suppliers

In China, which emits more greenhouse gasses than any other country, many factories use about 10 times more energy than their counterparts in Japan — giving global companies the opportunity to profoundly reduce their climate impacts by working with their China-based suppliers.

While energy-efficiency investments in China are cost-effective, challenges related to the country’s regulatory structure, professional energy-service-provider industry, and lack of information about opportunities and standards for measuring emissions often prevent companies from capitalizing on this opportunity.

This new report from BSR provides a clear outline for how leading companies how to launch supply chain energy-efficiency programs in China. The recommendations build on BSR’s experience helping Walmart launch its initiative to improve the energy efficiency of its top 200 China-based suppliers by 20 percent by 2012. The report also provides insights from BSR’s China Training Institute, which has trained more than 1,500 managers on energy management since 2004.

“The benefits to launching supply chain energy-efficiency initiatives are great: Companies can save money, reduce their energy-related risks, gather information to communicate to investors who are increasingly savvy about climate issues, and establish themselves as leaders before supplier energy management becomes mainstream,” said Ryan Schuchard, BSR’s manager of research & innovation.

Lead author of the report, Schuchard spent more than six months helping Walmart launch its efforts at the company’s global sourcing headquarters in Shenzhen, China.

“We identified energy efficiency as a significant opportunity to quickly enhance the resilience and environmental performance of our suppliers’ Chinese factories,” said Walmart Vice President of Global Sourcing Ken Lanshe. “But we quickly learned that while the successes of Walmart’s Supplier Energy-Efficiency Program (SEEP) in the United States provided us with an effective model, navigating energy efficiency in China required us to leverage local partners that possessed relevant knowledge, experience, and tools. BSR’s work helped us surmount these hurdles and ultimately reach more than 300 suppliers since 2009.”

The report can be downloaded here.